Qantas seeks return to black with Emirates deal

Qantas will terminate its joint business with British Airways in March 2013

Australian flag-carrier Qantas has announced a new global aviation partnership with Emirates designed to give customers a seamless Australian and international network.

Under the agreement, signed this morning by Emirates president Tim Clark and Qantas Group chief executive Alan Joyce, Qantas will move its hub for European flights to Dubai and enter an extensive commercial relationship with Emirates.

The ten-year partnership will go beyond code-sharing and includes integrated network collaboration with coordinated pricing, sales and scheduling as well as a benefit-sharing model.

Neither airline will take equity in the other.

Qantas will launch daily A380 services from both Sydney and Melbourne to London via Dubai, meaning that together Emirates and Qantas will offer 98 weekly services between Australia and Dubai.

Qantas will be the only other airline operating to Terminal 3 and the new purpose built A380 concourse at Dubai International Airport.

Joyce said the partnership would deliver unprecedented benefits to Qantas customers and mark a decisive step forward in strategy.

“Emirates is the ideal partner for Qantas,” Joyce said.

“It has a wonderful brand, a modern fleet, an uncompromising approach to quality and it flies to the A-list of international destinations.

“This is the most significant partnership the Qantas Group has ever formed with another airline, moving past the traditional alliance model to a new level. It will deliver benefits to all parts of the group.

“The time was right to develop a long-term partnership with Qantas, the iconic Australian airline,” said Clark.

“Since our first flights began in 1996, Australia has long been a popular destination for Emirates leisure and business travellers, making it one of the top three destinations in our network.

“By establishing this partnership we are providing our passengers with additional connectivity in Australia and the region, the ability to utilise reciprocal frequent flyer benefits and access to premium lounges and travel experiences.”

The airlines will submit an application for interim authorisation to the Australian Competition and Consumer Commission (ACCC) in order to begin commercial planning. Subject to regulatory approval, it is anticipated that the partnership will commence in April 2013.

British Airways

The Emirates deal will see Qantas terminate their joint business with British Airways on March 31st.

The joint business was established in 1995 to enable close commercial cooperation on British Airways and Qantas’ services between the UK and Australia.

The airlines will continue to work together as part of the oneworld alliance and through bilateral code-shares.

IAG chief executive Willie Walsh said: “We are ending the joint business on amicable terms and support Qantas’ decision to work with Emirates.

“The world has changed since 1995 when the joint business started. This is a small part of our overall network and this move fits in with changes in our global strategy.

“Asia has become a key market focus for IAG and we are talking to a number of airlines about alternative options for us.”

Qantas network changes

At the same time, Qantas has confirmed it will restructure its Asian network to strengthen its focus on services to and within the region.

“We currently have an Asian flying schedule based on travelling via Asia to Europe,” Joyce said.

“But our Australian business customers want better access to Asia, and we have been looking to address this for some time.”

“With European services transiting through Dubai, Qantas’ Asian services will no longer be a subsidiary of the ‘Kangaroo Route’.

“Instead they will be dedicated to connecting Australians with our region, and Asian visitors to Australia.

“We will increase dedicated capacity to Singapore and re-time flights to Singapore and Hong Kong to enable more ‘same day’ connections across Asia.

“We believe this will significantly improve the economics of our Asian operations.”

Qantas will also withdraw from the Singapore-Frankfurt route.

While this service has been underperforming for some time, and withdrawal was inevitable, the partnership with Emirates will enable it to take place with minimal impact on Qantas customers.

A full copy of the speech given by Qantas chief executive Alan Joyce this morning can be seen here.